Accounting is an integral part of the enterprise (if, of course, it wants to operate successfully for a long time). How is it organized? What are the nuances of accounting and management accounting? What needs to be known in order to have a full-fledged understanding of the state of affairs at the enterprise and not to come into conflict with controlling services?
general information
When talking about control over a company, enterprise or organization, they often mention accounting, financial, management accounting. What are they? For what purpose are carried out? What are their differences? Let's figure it all out. Initially, it should be noted that the main differences, due to which separate accounting and management accounting are distinguished, are the level of detail of information, end users, and also the technique used to reflect business operations.
What is the essence of the differences?
Initially, you must understand that the financial statements are used simultaneously for both internal and external consumers of information. In the first case, this is management, analytical, financial, and economic departments. External consumers are the tax inspectorate, the media (in which public reporting is posted), and audit firms preparing the organization to enter the stock exchange. But management accounting generates information intended for internal use. Its feature is that it is not publicly disclosed due to the content of confidential data. It should be noted that management accounting provides for the refinement of information in order to increase its value for management. It is based on it that effective decisions are made aimed at developing the organization. What can be given as examples? This data on the cost structure and the impact on it of various functional centers of responsibility, performance evaluation of the middle management link and so on. Detailedization of the financial and economic information that is available allows you to carefully analyze the results of activities, as well as assess the current state of the enterprise. After all, the more data, the easier it is for specialists to identify and sort the factors that affect indicators. You should be aware that the idea of combining accounting and management accounting is not good. Why so?
About incompatibility
The information contained in accounting, as a rule, is sufficient for analytics and management decisions. But when combining two functions in one, the quality of training and work in both areas suffers. What is the catch? The thing is that both accounting and management accounting use different techniques. Let's look at a small example. The same accounting is regulated to a certain extent. But management has no limitations. Therefore, when combining it is necessary to apply various methods of data transformation. And this complicates the work, requires the presence of highly qualified personnel (which is paid higher) and increases the likelihood of errors. Also, the management accounting technique is engaged in obtaining reliable and up-to-date information that will be clear to the founders and heads of the organization. Compared to bookkeeping, it can be both simpler and more complicated. And this is true not only for the general situation, but also for individual elements. Let's look at a small example.Fixed assets are introduced with subsequent payment. Accounting / management accounting is necessary to reflect the situation. But in the first case, it is necessary to make entries on all accounts, while in the second it is enough to simply inform about the cost of the funds and where the money was taken from (from reserve, profit, credit, etc.).
Various aspects
It should be noted that the above information is not the ultimate truth in full. So, depending on the objectives, various focused aspects of the work can be distinguished. Let's say - accounting, tax, management accounting. What is implied in this case? Management accounting refers to the creation of structured data for enterprise management. Under the tax - data is generated for the fiscal system. And accounting - for external users, such as audit companies. At the same time, the requirements for detailing, the speed of formation and the data presented, the methodology used, are changing.
Take management accounting. In this case, it is necessary to quickly receive high-quality and reliable information about what is happening at the enterprise (how much and where what was produced, bought, sold). Information should be updated in real time. Tax accounting requires the collection of data for the month, their structuring in a certain way and subsequent transfer to the territorial representation of the fiscal system. In this case, it is necessary to monitor the accuracy of the information so as not to receive a fine. Accounting statements can be created to provide general data to the company or to the owners of the organization (provided that they are not its leaders). In this case, each enterprise creates conditions convenient for itself. For example, it divides into accounting, financial, and managerial accounting, but does not allocate tax. Or something else. Here everyone decides for himself. Necessary, obligatory are only accounting and management accounting.
Differences in information components
What is in reality in the enterprise and the data transferred to the tax service are two different things. Although management / accounting information is outwardly similar, but some of it is protected more than one’s eye. And the first is used to display the true state of affairs. Let's look at a small example. Now the situation is quite common when, when we arrive at the store, we receive several checks. This is done in order to minimize paid taxes. Moreover, each individual legal entity acts on its own from the point of view of the tax service. But the owner of this whole system must be kept under control and with his attention the whole situation. Something similar can be brought about in the case of subsidiaries. True, in this case they are created more likely to differentiate administration and optimize the process of interaction with the client. Imagine that all firms are just pockets. For the tax office, they all operate separately, while for managerial accounting it is necessary to ensure that there is a holistic picture. In some places a unified analysis is needed, sometimes a separate analysis, but this does not change the general situation.
When do other divisions create?
The article mentioned that, for example, financial statements can be kept as a separate component. At first glance, this may seem silly, but do not rush to conclusions. When is this possible? Imagine there is one company. At the same time, activities are carried out in several territorial offices that are not legally separated. And that’s all - the conditions are ready for the implementation of separate financial statements, which, moreover, is also reduced to a common one.Why do you need to do this? And how else can you understand the effectiveness of the units! Indeed, to obtain such data, relying solely on financial statements, will be problematic. Perhaps, of course, but it is very difficult and fraught with significant problems. Allocate accounting, tax, management accounting is also necessary in such cases. After all, production is one thing, and international activity is quite another. Production can be in some conditional Yaroslavl, while official representative offices can be in Belarus, Ukraine, Poland, Norway, Sweden, Finland. But at the same time, you should not go ahead. So, accounting management expenses may be of interest to shareholders of the enterprise. But if it belongs to the director who created it, then there is no need for it (or it is minimal and can be ignored). But not in terms of counting, but in further strategy. And of course, you need to monitor the use of funds.
Some examples
Accounting / management accounting with examples is remembered much better. Let's say there is a client. He is the owner of four legal entities. Yesterday there were interactions in one, today in the second. Tomorrow the client uses a third legal entity, and after a week - the fourth. How much money was earned by interacting with him? Is this interesting from the point of view of working with each individual legal entity? Of course not. Let it remain for reconciliation of data and bureaucratic operations. But in order to thoroughly analyze the situation, make forecasts and make the necessary decisions, you need to look at "the whole client." This applies to accounts receivable, revenue, revenue and other indicators. And here, accounting / management accounting is responsible for different moments. The tasks facing each of them allow you to complement and better navigate in a real situation.
Let's look at another example. Let's say there is a warehouse. It has many racks. For accounting is not important information about where which product lies. Whereas for management accounting this can be of great importance. Why? Yes, at least in order to quickly find the right product. After all, if the warehouse occupies several tens of square kilometers, then it will be problematic to find, say, screws.
We continue to consider the example of a warehouse. Suppose its area is ten thousand square meters, and it is divided into one hundred zones. A client comes and says that he wants to buy a kilogram of nails. And if the accounting department writes off products during the sale, then with the management it is necessary to find the desired zone and show that there is less goods there. But that is not all. What is the difference between accounting management accounting? Expenses! After all, if we sold nails to a client, then you need to order them at the factory. Of course, a kilogram may seem too small to draw up a new batch. But a ton is a completely different matter.
Project management
Each enterprise creates or works on something. The system of accounting / management accounting allows you to operate with dry data. But what if it is necessary to process the project (not just costs / profits, but estimates, prospects)? Here bookkeeping will not help. It simply does not have the concepts necessary for this, and there are also problems with the tools. Whereas management accounting is indispensable. Let's look at a small example. An agreement is concluded, according to which the company must build a house. This is a long process in itself. Initially, it is necessary to purchase materials, hire people, and ensure that the work is carried out on schedule. In this case, it is necessary to control the entire process. After all, if there are problems with the water supply, foundation or soil, then all this will cause delays. So, if electrical appliances work from generators, then you need to take care of the presence of gasoline, and before it runs out.If there is no project management program, that is, it is not known how all this will be taken into account and what the consequences will be, then when building a house they will have one problem.
Difference when working with people and papers
The method of accounting / management accounting also depends differently on the qualifications of the staff performing the assignment. What does this really mean? To conduct accounting, you need to learn the accounts, make the right entries and distinguish between debit and credit. With management accounting, such a minimum set of skills will not help. Let's look at a small example. There is a company where numerous employees work as consultants. Their duties include communication with customers, calls to them, writing letters, sending documents. And then one person quits. Where to find all the information he worked with? The answer to this question can most often be given only by the client himself. And the enterprise at the same time remains with a nose. It is not known with whom he spoke, when and what he agreed on. To avoid such unpleasant situations, management systems are created where all the necessary information is constantly recorded. She takes into account each letter and call. They are saved and recorded. And the data does not belong to the consultant, but to the company. By the way, this is not the only advantage of automation. Suppose a contract was concluded, of which there are many. After a year, you need to find him. And how to search? But the selection and sorting algorithm will quickly detect and retrieve the desired document.
Conclusion
Due to the limited volume of the article, we cannot fully disclose all the features and nuances of the differences. One could also talk about the differences in optimizing stocks, where big problems are often observed. It is also necessary to monitor the operation of the equipment, its maintenance, monitor the repair process, and know exactly where the engineer went. All these accounting programs provide, to put it mildly, with great difficulty, presenting only dry numbers. It should also be remembered about the reflection of business processes, contracts, applications, procurements. In accounting, the fact of the implementation of a certain event is only recorded, which is financially reflected. It appears that the raw materials came, they paid for it, then used it. But in reality, everything is much more complicated! It is necessary to find a supplier, place an order, receive an estimate, fill out an application for payment, consider it and give the go-ahead. And that is not all...